Shaking Dutch Grounds Won't Shatter the European Gas Market

26 Pages Posted: 5 Nov 2015

See all articles by Franziska Holz

Franziska Holz

German Institute for Economic Research (DIW Berlin)

Hanna Brauers

German Institute for Economic Research (DIW Berlin)

Philipp M. Richter

Dresden University of Technology - Faculty of Economics and Business Management; German Institute for Economic Research (DIW Berlin)

Thorsten Roobeek

Hertie School of Governance

Date Written: November 2015

Abstract

The Netherlands have been a pivotal supplier in Western European natural gas markets in the last decades. Recent analyses show that the Netherlands would play an important role in replacing Russian supplies in Germany and France in case of Russian export disruption (Richter & Holz, 2015). However, the Netherlands have suffered from regular earthquakes in recent years that are related to the natural gas production in the major Groningen field. Natural gas production rates – that are politically mandated in the Netherlands – have consequently been substantially reduced, with an estimated annual production 30% below the 2013 level. We implement a realistically low production path for the next decades in the Global Gas Model and analyze the geopolitical impacts. We find that the diversification of the European natural gas imports allows spreading the replacement of Dutch gas over many alternative sources, with diverse pipeline and LNG supplies. There will be hardly any price or demand reduction effect. Even if Russia fails to supply Europe, the additional impact of the lower Dutch production is moderate. Again, alternative suppliers from various sources are able to replace the Dutch volumes. Hence, the European consumers need not to worry about the declining Dutch natural gas production and their security of supplies.

Keywords: Natural gas, supply security, Europe, equilibrium modeling

JEL Classification: C69, L71, Q34

Suggested Citation

Holz, Franziska and Brauers, Hanna and Richter, Philipp M. and Roobeek, Thorsten, Shaking Dutch Grounds Won't Shatter the European Gas Market (November 2015). DIW Berlin Discussion Paper No. 1516, Available at SSRN: https://ssrn.com/abstract=2686065 or http://dx.doi.org/10.2139/ssrn.2686065

Franziska Holz (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Hanna Brauers

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Philipp M. Richter

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Thorsten Roobeek

Hertie School of Governance ( email )

Friedrichstraße 180
Berlin, 10117
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
21
Abstract Views
527
PlumX Metrics